As of last Tuesday, one in nine of the homes for sale in the Phoenix real estate market (according to the Arizona Regional MLS) was a bank-owned home. If properly priced - either at or below current market rates - many of these REO properties will see multiple offers before a final buyer is selected.

Though some banks are becoming more proactive in making borderline properties sellable - borderline meaning too trashed to ask market value but not trashed enough to offer at near wholesale pricing - bank-owned homes still may not be for everyone.

Here are 5 things to keep in mind if you’re thinking of buying a bank-owned home:

1) Prepare for multiple offers. On one bank-owned home a client of mine tried to buy, there were nine offers the first day. She didn’t get that one. On another REO home, my buyer was one of three offers. We did get that house. On a third house back in March my buyers and I were told there were multiple offers. Still not sure if there were but that’s another story for another time.

If the house is priced well, you’re not going to be the only offer on the property. Which is why you need to …

2) Make your first offer your final and best offer. In a multiple offer situation, at some point the lender (or the lender’s listing agent) is going to ask you for your final and best offer. Knowing that call is almost certain to come,  make your initial offer your final and best. If you get the house, great. If not, you know you made the best offer you could make in an effort to buy.

On the middle example above the lender’s agent asked us for our final and best offer. We told the agent that we already had submitted our final and best. My buyer got the house and will be moving in within the next couple of weeks.

Knowing the game helps.

3) Be prepared for the lender addendums. These vary from Countryide’s 18-page mosnter to a few pages from most other lenders. All are different but all essentially tell you that you’re purchasing the home as-is. Sometimes the addendum also will set a date by which the sale must close which can be different than the date in the contract.

You don’t have to sign these addendums unless, of course, you want to buy the house.

4)  Get a home inspection. If your offer was written on the AAR Purchase Contract, you have 10 days to complete your inspections and other due diligence. Take advantage of this time frame and hire a professional home inspector to check the property for you. The lender likely will not make any repairs but at least you know what you’re up against.

If possible, try and be present at the end of the inspection so the inspector can take you through the house and discuss what they’ve found. Everything in an inspection report sounds severe but a good inspector will help you understand what issues are serious and which are fairly common.

5) Know your lender. Most lender addendums have a sentence adding a per-day fee if you’re unable to close on the house on time. And most often the delays take place because a lender’s unable to get the loan documents to the title company on time. This isn’t the time to use your cousin for your loan, not unless he’s been established in the business for a significant period of time.

Get a reputable lender and stay on top of them to make sure your loan is moving ahead toward an on-time close.

Have additional questions not answered here? Contact me through the form on the right or via e-mail and I’ll be happy to help!

Technorati Tags: Phoenix real estate, bank owned homes

Popularity: 2% [?]

Share This

Tags: Phoenix Foreclosures, General Real Estate, Tips for Buyers // Add Comment »

And my wife’s still shaking her head …

Have a safe Fourth of July, folks!

Popularity: 3% [?]

Share This

Tags: Miscellany // Add Comment »

One of my favorite folks from Trulia Voices made another appearance the past couple of days. It seems the search for a bank owned property in Verrado has not gone well for Jane. Eight-six single-family detached homes have sold in Verrado, a master-planned community on Buckeye’s eastern edge, but Jane has not yet been able to get a home under contract after several months of trying.

The reason? Not the lowball offers, even as the bank owned market quickly became a sellers’ market with multiple offers. No, the issue here is the listing agents themselves.

EVERY time a foreclosure pops up for sale in this neighborhood, it seems like there are SEVERAL offers already made on the house BEFORE ANYONE else even gets the chance to bid. AND, I’m pretty sure MOST of the one’s that have SOLD that are REO, have been sold to the Listing Agent’s Clients so that the LA can get ALL the commission. I KNOW it’s ILLEGAL AND UNETHICAL, but I’m tellin ya, IT’S HAPPENING HERE, sad as that is.

Checking the Arizona Regional MLS, though, there were 25 sales of bank owned homes in Verrado. Want to know how many homes were sold by the listing agent to his or her own clients?

Three.

Bank owned homes in Verrado are remaining on the market an average of 31 days and are selling within a few thousand dollars of list price on average. Contrast that with a strategy that in the past has involved offering substantially below list price.

For several months I’ve wondered why Jane keeps asking the plebicite advice on how she should purchase a house, even once comparing the philosophy to trying to win a car on The Price is Right. Jane has an agent. I presume she even listens to her agent though it’s never been clear whether the agent’s advice matches that coming from the hoards hoping to pick up a scrap of business by helping the agent be cuckolded.

But she is right … Trulia Voices is a Q&A Forum by design. Agents need only choose not to answer should they realize they’re interfering with another agent’s relationship with his or her client, but that doesn’t happen. Instead, one can sit back and watch folks who presumably have other clients running full comps for someone working with another.

Bank owned homes are a different beast at the moment. I’ve written as much not so long ago when confronted with nine offers on one house in one day.

Still, one Canadian buyer just closed on a bank owned home in Goodyear. Another young couple will be moving into their soon-to-be-former REO property in Tolleson within the next couple of weeks. Another young couple moved into their former REO in April.

There’s no mass conspiracy to only sell bank owned properties to our own clients. Most agents here are so desperate for a sale that they’ll be more than happy with their own side of the commission without greedily lunging like the dog and the bone peering into the stream.

Before casting wild (and thoroughly incorrect) accusations about why a purchase has not been successful, perhaps it would be better to heed Albert Einstein …

“The definition of insanity,” Einstein said, “is doing the same thing over and over again and expecting different results”.

Technorati Tags: Phoenix real estate, Trulia Voices, Verrado homes for sale

Popularity: 4% [?]

Share This

Tags: Bad MLS/Trulia Remarks, General Real Estate, Tips for Buyers // 4 Comments »

Here’s where things stand on the bank owned home front …

FHA buyers are making up an increasing portion of the Phoenix real estate market’s pool of buyers. Even buyers who could qualify for a conventional loan often are looking at FHA financing because of the lower down payments that are required - typically only 3% of the purchase price.

FHA also is the virtual last bastion of 100% financing thanks to programs such as Ameridream, where sellers can make a gift to a third-party non-profit that then is passed on to the buyer.

But here’s the catch with FHA: FHA is fairly particular about the condition of the property. And there’s the rub. Because the bulk of homes being sold right now are bank owned homes, where the biggest question mark is condition.

Simply put, many bank owned homes can’t be sold to FHA buyers in the condition in which they’re left by their departing owners. And this leaves the bank with a decision - try and sell the home to the few rather than the many, or spend the money on paint, carpet and rudimentary repairs and access the largest possible pool.

In other words, banks are having to think like sellers and not just monoliths transferring property ownership with virually no work required.

Bank owned homes still are a gamble in as much as there’s no telling the condition the home will be in, cosmetically and structurally. But the steady push of the irresistible force that is FHA financing in today’s market is slowly causing the unmovable object - the bank’s REO department - to move in the buyers’ favor.

Technorati Tags: Phoenix real estate, FHA financing, bank owned homes

Popularity: 5% [?]

Share This

Tags: Phoenix Foreclosures, General Real Estate, Tips for Buyers // 2 Comments »

Every now and again an e-mail will come to my Inbox titled “By Referral Only.” Entire seminars are devoted to the concept of a referral-only business model.

In all honesty, it’s probably a viable way to do business. But it’s also not for me for a couple of reasons.

I’ve devoted a considerable amount of time and energy to my websites - to this blog, to my neighborhood sites for Westbrook Village, Arrowhead Ranch, Ventana Lakes and Phoenix Retirement Real Estate. It would be somewhat dishonest to continue trying to grow my client base through these sites even as I claim not to accept clients that weren’t referred to me. And it also would be somewhat daft.

One of my clients asked me today if I enjoy my job and the answer - the real answer, not the sarcastic, knee jerk “of course I don’t” - is that I do. I’ve met a tremendous number of wonderful people through my business and look forward to those I’ll meet in the future.

When past clients e-mail me to discuss the NHL free agency period because they know I cover the Phoenix Coyotes on a free-lance basis, it’s clear something went right in our working relationship.

My other reason for avoiding the By Referral model is it appears you spend your time hounding the same few dozen people, trying to squeeze every last ounce of business, and at some point there will be no new business to be had.

Don’t get me wrong - there’s no greater compliment than to be recommended by a past or current client to friends and family. But it’s also not what I consider the firm foundation needed for a viable business. There’s far too much competition to sit back and wait for the business to arrive on your doorstep.

But Jonathan … couldn’t the time you spend prospecting be used to serve current clients? Maybe, if I wasn’t doing the bulk of my prospecting on the Internet. Through all of the websites I’m available 24/7 even when I’m not really available 24/7 … I don’t need to be in front of the computer screen or on someone’s stoop banging on their door to attract new buyers and sellers.

It is the way in which I prospect that allows me to provide top service to my clients while looking for additional clients in need of such service.

And it’s also because of electronic prospecting that I’ve had the opportunity to meet as many Canadian buyers as I have. Which has been enjoyable, aside from those rubbing in the Coyotes’ lack of movement in the free agent market.

Nothing’s perfect.

Technorati Tags: Phoenix real estate

Popularity: 6% [?]

Share This

Tags: General Real Estate // Add Comment »